Weekly Market Overview

The markets moved higher on better-than-expected consumer confidence numbers today despite poor housing news. The S&P/Case-Shiller home-price index showed a 14% drop in the first quarter compared with a year earlier, which is the sharpest drop in nearly two decades. Meanwhile, the dollar gained against the Euro and Yen, which helped relieve oil prices while the market continues to attempt to gauge the threat of inflation. Other big news of the day included Bank of America's interesting plan to acquire an 11% stake in China Construction Bank. In the end, investors are still waiting to see just how quickly the market will be able to recover, or if we are headed into a recession.

Top 10 Stocks to Watch this Week

Fundamental Analysis

1. Petroleo Brasileiro (PBR) - Petroleo Brasileiro SA (NYSE: PBR), known as Petrobras, announced a discovery in the Gulf of Mexico today. The diversified oil and gas company confirmed the discovery of hydrocarbons in ultra-deep waters in the Central Gulf of Mexico. The Stones #3 well, located in Block WR 508, found oil in multiple sandy lower tertiary reservoirs and is 25% owned by Petrobras. Future drilling and assessment activities are planned to define size and viability. (Read More)
2. EMC Corporation (EMC) - announced earlier this week that it plans to keep its 86% stake in VMWare Inc. (NYSE: VMW). Many investors may have been looking forward to at least some divesture given the fact that the market doesn't appear to be valuing its VMWare stake anywhere close to its intrinsic value. However, the company is clearly betting that the market will eventually come around. (Read More)
3. Cheniere Energy, Inc. (LNG) - Cheniere shares fell sharply today amid a broad decline in oil futures and weakening prospects for the company itself. The liquid natural gas producer has dropped from over $40 per share just a year ago to its current levels around $5 per share amid growing operational losses and a liquidity crisis. (Read More)
4. MercadoLibre, Inc. (MELI) - MercadoLibre shares continued their free fall today after it announced disappointing earnings earlier this week. Shares in the Latin American eBay-clone are down nearly 20 percent this week, but how much more will this stock drop. After all, the results may have been negative on the surface but are a bit better when you look under the hood and consider growth characteristics for such businesses. (Read More)
5. Verigy Ltd. (VRGY) - Verigy shares moved up about 9% in pre-market trading Friday after besting estimates with its second quarter results Thursday. The Singapore-based semiconductor company reported a drop in net income for the quarter to $14 million, or 23 cents per share, from $22 million, or 36 cents per share, a year earlier. Verigy's revenue was also down, dropping 11% to $162 million; however, both results beat Wall Street estimates of net income of 19 cents per share on $161.5 million in revenue. (Read More)
   

Technical Analysis

1. Matrixx Initiatives (MTXX) - Intermediate-term bullish bottom triangle.
2. Washington Mutual (WAHCU) - Intermediate-term bullish bottom triangle.
3. Kforce Inc. (KFRC) - Intermediate-term bullish diamond bottom.
4. Synovis Life Technologies (SYNO) - Intermediate-term bullish diamond bottom.
5. Universal Display Corporation (PANL) - Intermediate-term bullish diamond bottom.
   

Stock of the Week : EMC Corporation (EMC)

EMC Corporation (NYSE: EMC) announced earlier this week that it plans to keep its 86% stake in VMWare Inc. (NYSE: VMW). Many investors may have been looking forward to at least some divesture given the fact that the market doesn't appear to be valuing its VMWare stake anywhere close to its intrinsic value. However, the company is clearly betting that the market will eventually come around. (Read More)

Article of the Week : Who Really Benefits from Higher Oil Prices?

Oil prices rose today to hit a new record of $126.98 per barrel as inflation continues to soar. Higher oil prices tend to hit the same groups of stocks day after day: Exploration and production companies tend to increase sharply, transportation companies rise marginally, and refiners tend to drop sharply. The rationale for this price movement is simple... (Read More)

Final Words

The future of the U.S. economy remains uncertain despite an improvement in the financial sector thanks to dealmaking. Overall, the economy seems to be heeling, but consumers may lag a bit behind as weakness in spending is seen for at least a couple more quarters.